Andrew Horowitz

Capital One: A Different Short Case

Forrest & NC
Agree about the lessons here. Also, I agree that the lack of nice remarks/comments is to be expected with the large number of amateurs that have an emotional attachment. But that is the same reason why they will lose...time and time again.

But, may I also suggest you take a look at my writing on my site as much is not picked up here....
www.thedisciplinedinve... and I am participant in MSN Strat lab. Interesting stuff ( I think...)

Best

A

Capital One: A Different Short Case

Now that was some honesty! Nice job.. seriously...

I must say, I need to thank you. Seriously. I shorted right after I wrote that to you the other day. $45 for a trade for my client.. a nice position too. It was clear that the troube is not over. So, thanks.. really ( Not to rub it in)

BUT, I do have to ask and without pimping my bon too much (The Disciplined Investor). It is not that you did not sell at $90, 0r 80 or 70 or 60 or even 50. What is up? If you are investor does not mean you canot sell, hedge, sell calls, or something. Truth is that you are never going to sell. So, what is the point of even knowing what the stock or mamangement does? I am nit kidding. If you are not going to sell, forget about it ( not suggesting that it is a good idea to hold but...)

I never understand "investors"...

You can't sell because:
1)If it goes up, it coud go higher
2) If it goes down, you wait for it to come back
3) When it comes back, it is going higher.
4) When it goes back down, you promise that you will sell , if only it gets to $...
5) Then it gets there, and you feel that you were right all along and hold.

If it goes down, you think everyone else is wrong. But think about this: If you are in a room with 100 people and you are the only one that is right...... YOU ARE WRONG!

Ponder that and relate it back to so many of your other stocks that the same thing happened over and over. Just because you don't want to pay th 1-2% fees. YIKES! Crazy Math...

Andrew


On Aug 12 01:00 PM Forrest wrote:

> Andrew, sorry man, I know that you do give good advice in general
> and yes, Capital One is one of many financial institutions that has
> its problems. You do read a lot of BS posts on SA, I guess that
> mine was just another BS post. But as a long on COF, and man I mean
> very long - long since Capital One was spun off from Signet Bank
> ($5.33 split-adjusted) at as a pure credit card play, I get tired
> of reading about how much of a bunch of morons are running COF and
> that COF is going down the toilet. I know that many people hate
> Capital One with a passion and it shows by some of the reply postings
> yours and other COF articles. Heck, I don’t know, maybe they had
> a bad experience with them as a customer when they didn’t pay their
> bill on time or something.
>
> On the other hand, I too have gotten more than a little hot under
> the collar with COF’s management when they decide to branch out into
> banking, auto loans, mortgage loans, and HELoC. Yes, COF could
> do no wrong as a pure credit card play in the ’90 and even up to
> about ’05. They consistently made money, grew, and their write-offs
> were better than normal, especially since that they started as
> a sub-prime credit card issuer. As time went on, COF migrated more
> to a main-stream card issuer, which I think was a move in the right
> direction. Everything seemed well until COF decide to buy Hibernia
> Bank during Katrina, but the stock price held up. Now with the
> substantial exposure to the NYC (and elsewhere) mortgage melt-down,
> big home-equity lines of credit, some of which are tied to foreclosure
> properties, you bet that Capital One is feeling the pressure. Did
> I mention auto loans? You would think that auto loans would still
> hold up, but even once great sub-prime used car loan maker Americredit
> (AFC), is now sucking wind. That being said, I think that COF’s
> current mid-40’s price reflects the true value for this company at
> this time, and I think that the market already has those factors
> that you and this author address already built in to the price.
>
>
> One thing COF shorts and potential shorts do need to watch for is
> that at current levels is that COF’s stock price tends to ride
> up or down with market in general. Lately, very seldom do you find
> a day where COF’s will go down when the market in general is going
> up. If you have a big down day or week in the market you can probably
> short just about any financial and come out on top. I personally
> think that the big short opportunity on COF happened last year when
> if dropped from the 70’s to its current trading level. As for shorts
> and puts on COF? I would say make money in a daily position. Take
> a COF short position and hold on to it? To me that would be like
> playing with fire.
>
> BTW, if you guys like to look a financial stocks that go against
> the grain and don’t have much coverage, take a look at World Acceptance
> Corp (WRLD), but hell what do I know, I didn’t sell COF when it was
> in the 90’s!

Capital One: A Different Short Case

You know, now that I look.. it is interesting that FORREST has only commented on COF here at SA..

See: seekingalpha.com/user/...

I wonder who Forrest really is. Now I am interested...

Lets see:
On Jan 22, he commented when the stock was at $37.
On March 25th, he commented on my article when it was $52

So, now COF is $46. I am not sure that I was so wrong Forrest. Maybe you cannot see the trees my friend. Yes, you were right in January. That was a different time.

Can you tell me one thing? What is that huge off balance sheet item feel like to you as a shareholder? Not concerned about securitization legislation?

Listen, don't let the facts get in your way. Just do us a favor and recognize who is the hypester.

You were the same type that whacked me all last year when I was writing about CROX as a prime short. Not one thank you, but lots of crapola from the fanatics.

seekingalpha.com/artic...
seekingalpha.com/artic...

That was June 2007 when Crox was around $40ish. Stock went up for a while, then the truth set in.

Capital One: A Different Short Case

Forrest:

Interesting. COF DID go to mid 30's and I do not recall predicting 20's, so please DO NOT mis-quote. If you do find some reference to a $20 target, I would like to see and will gladly apologize.

Started discussing in March about credit companies, was I right? YES! COF was $50 or so when I first discussed. Timing was early, but come on and give some credit. A you are not a client and we do not discuss client trading ( just some general overviews) You need to be careful when you speak with such authority.

And yes, we covered some, but profited and on PUTs nicely along the way as well. While I should have stuck with general view of the company, ther was a risk management plan in place, so that if the price moved away, we do not get burned. This is why I stay away from usless commentary without fact.

Your points are not backed up by any fact. The author here does present some good data. AND, to be honest, the NY scene is a major concern.

Unless you are client (which you are not) you cannot have information about this matter, so kindly take your false and biased commentary somewhere else. If you listen to the podcast or read the blog, also, the above would have been what we discussed.

If you would have shorted when I mentioned on the first, second, third....tenth time, you would be up anywhere from 10-15% now, at the low, 30%.

It has become like the old noisy message boards over here. Need to rethink SA....

Andrew

Double Whammy: Bank Card Companies May Be Next

Is it me? Or has anyone else noticed the venom and lack of constructive comments posted when someone suggests a short? Like clockwork, the name calling and stab-and-run gang posts comments with nothing to add. Come on.. boilerplate? Shallow? I would like to see your analysis.

Hello? I would wager that both Iceman and Forrest are one and the same.

And, shorts working out so far, thanks. (did anyone see the downgrade today?

www.thedisciplinedinve.../